Asked on Reddit: How Much Is Too Much to Pay for Rent?

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A Reddit user recently asked: How much should I spend on rent each month?

The poster shared that they recently moved to a new town with a new job and are trying to decide if they’re paying too much for their apartment. They don’t want to overspend on rent and put their financial security at risk.

Financial experts generally embrace the 30% rule, but say it’s important to consider other factors before signing a lease. Here are five guidelines to keep in mind.

While spending around 30% of your gross pay on rent is a good starting point, the exact percentage will likely fluctuate from person to person, says Emily Safford, a Philadelphia-area certified financial planner and wealth advisor at financial services firm Girard, a Univest Wealth Division.

She says to think about your ultimate goal when it comes to renting. “Do you want to rent long-term? Or are you renting until you can afford to purchase a home?” she asks.

If it’s the latter, then you may want to spend less than 30% of your gross income on rent so you can save more for your future home purchase.

If, on the other hand, you plan to rent long-term, spending 30% — or even a bit more — on rent may make sense if you can swing it. If your rent includes other amenities such as access to a gym, pool, short commute and utilities, then the higher cost might be justified, Safford adds.

“Put a magnifying glass on your expenses. There are usually areas you can cut down quickly, like streaming services, Instacart and DoorDash,” Safford says.

Otherwise, she says, you risk overextending yourself and building up credit card debt.

Sometimes, you can cut back on rent costs by living with roommates, moving into a smaller apartment or selecting a less popular (and less expensive) neighborhood.

“It is much cooler to live in a cool district and walk to restaurants and bars, but at some point, we have to think about what we can realistically afford,” says Aaron Ulrich, owner and financial advisor at Integra Financial Planning, a financial planning firm in Kentucky.

Ulrich gives an example. It might be nice to rent a unit within walking distance of your favorite yoga studio, but maybe you can find a cheaper rent and stream free yoga lessons on YouTube instead.

Then again, a roomie might help you afford the place you want near the hotspots and avoid living room yoga.

Of course, you may have to find a way to be happy with what’s realistic.

Saving money for your future is more important than living in a “cool” neighborhood, Ulrich says. He encourages people to put savings first, even if it means living in a less-appealing place.

“If you’re not saving for retirement or you’re saving too little, you are missing an opportunity to be investing,” he says.

Keep in mind that rent doesn’t always remain the same, Safford says.

“Try to leave wiggle room in your budget for rent increases and other unexpected events,” Safford says. While you might not be on the hook for major home repairs, you could face other costs like personal property damage from a leaky pipe.

“One of the biggest mistakes I see young people make is that they assume everything is going to stay the same,” Welsh says.

“Inflation will continue to happen, whether your salary increases or not,” she adds. “There are many unknowns in the future that may eat up some of your money.”

Given that fact, the 30% rule cited by Redditors — or even less — sounds about right.

Reddit is an online forum where users share their thoughts in “threads” on various topics. The popular site includes plenty of discussion on financial subjects like budgeting and housing costs, so we sifted through Reddit forums to get a pulse check. People post anonymously, so we cannot confirm their individual experiences or circumstances.

About the author

Kimberly Palmer is a personal finance expert at NerdWallet. She is also the author of three books about money: “Smart Mom, Rich Mom,” “The Economy of You” and “Generation Earn.” Kimberly’s work also appears at NerdWallet Canada.